Both of those reports have now come true. The Australian government has officially designated ASC Pty Ltd. subsidiary ASC Shipbuilder as the preferred shipbuilder for the SEA 4000 program. Australian Defence Minister Robert Hill announced that the 3 destroyers will be built at ASC’s shipyards in Adelaide, South Australia, shifting the Australian shipbuilding industry away from its current center in Melbourne, Victoria. Several important details remain to be finalized, however.

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The destroyer contract is the biggest single domestic construction program under Australia’s 10-year, $50 billion Australian dollar (USD $37.8 billion) defense acquisition plan.

ASC was unanimously chosen by a Source Selection Board through a tender evaluation process involving ASC Shipbuilder (who had built the new Collins Class submarines for the RAN) Northrop Grumman Ship Systems and Tenix Defence (who had built the joint Australia/ New Zealand Anzac Class frigate). The conduct of the evaluation and selection of ASC Shipbuilder was reviewed by the Air Warfare Destroyers Program Probity Advisers KPMG, and also independently by Sir Laurence Street, both of whom reported that the process was fair and equitable.

ASC, previously known as the Australian Submarine Corp., is due to be privatized in 2006. With this contract in hand, its value will receive a significant boost.

The Australian government has now granted first pass approval and provided ASC with AUS $455 million (USD $343 million) toward the next phase of the SEA 4000 project, including further design work, workforce skilling and initial infrastructure investment. This investment will fund the program until mid 2007, and will further reduce project risk in accordance with the recommendations of Australia’s Defence Procurement (Kinnaird) Review. In 2007, the Government will consider second pass program approval.

More than 1000 direct jobs will be created in South Australia as part of the build contract. In addition, up to 70% of the module construction will be sub-contracted to other shipyards around Australia, creating around 1000 additional jobs throughout the country. In line with the Government’s Skilling Australia’s Defence Industry program, companies bidding for these contracts are required to include Australian skills and training components in their tenders.